Wednesday, 29 June 2011

The European Council 23 to 24 June 2011 was supposed to be the grand finale of the first European Semester, spiced with the Euro Plus Pact, so what did the heads of state or government leave posterity?

The 'Res Gestae' web pages record the deeds of our secular leaders with regard to economic policy:

The political leaders discussed economic policy coordination; the amendment of the European Financial Stability Facility (EFSF) and the ratification of the European Stability Mechanism (ESM) treaty; and the situation in Greece.

Economic policy coordination

What does the summary of the European Council conclusions tell us about the road towards sustainable public finances (Stability and Growth Pact, SGP) and growth-enhancing reform policies in line with the Europe 2020 strategy (EU2020)?

The leaders marked the end of the first European Semester under which the EU makes a six-monthly, simultaneous assessment of national stability and convergence programmes planned by member states.

The European Council endorsed country specific guidelines, without any watering down, and noted the determination of member states to do everything necessary to implement the Stability and Growth Pact (SCG). Targets that require additional efforts include employment, energy efficiency, R&D, poverty, and tertiary education. Member states should also give priority to ensuring a sound macroeconomic environment, restoring fiscal sustainability, correcting macroeconomic imbalances and strengthening the financial sector.

Member states are invited to take account of the guidelines when finalising their budgets for 2012, which are then decided on by the national parliaments during the autumn.

These national efforts should be supported by EU level work to enhance economic growth and job creation. In particular, the regulatory burden of SMEs should be reduced and, where appropriate, micro-enterprises should be exempted from certain future regulations, or at least subject to a lighter regime. The Commission should also provide a roadmap on the completion of the digital Single Market by 2015.

With regard to the Euro Plus Pact, the European Council concluded that the next round of commitments to a list of reforms intended to improve the fiscal strength of participants should be broader in scope, more concrete and ambitious, and should include a pragmatic coordinatinon of tax policies.

The statement seems to bear out the ”stronger sense of common responsibility”, noted by president Herman Van Rompuy, although the press release did not bother to specify which country-specific guidelines the European Council endorsed ”without any watering down”.

Usually, one or more working groups, presidency papers, Coreper meetings and Council configurations intervene between Commission recommendations and summit conclusions.

European Council conclusions

How about the Stability or Convergence Programme and the National Reform Programme (NRP) of each EU member state?

In paragraph 2, the European Council called the assessment provided by the Commission ”a good starting point”, but this time it does not look like an exercise in the use of weasel words, because ”additional efforts” are needed to attain some of the headline targets and goals of the Europe 2020 Strategy for jobs and sustainable growth.

The European Council specified that it endorsed the country-specific recommendations as approved by the Council (paragraph 3).

The conclusions proceed to outline coming measures to promote economic growth and job creation, as well as the next round of commitments under the Euro Plus Pact. Even the conclusion of the Doha Development Round was paid ritualistic observance.

To be continued on a few blogs near you.

Ralf Grahn

P.S. The Commission doesn't understand politics, wrote Ronny Patz on Polscieu (Ideas on Europe). The blog post has generated some interesting comments.